The Endowment Diary

The Endowment Diary


The Endowment Mis-selling Debacle - one of the UK's worst financial scandals

Monday, May 26, 2008

Standard Life Rejects Fund Call

Standard Life Rejects Fund Call

Standard Life has rejected a call to use £100M a year from its profits to fund a programme to cover the firm's endowment policy "black hole".

The call to build up a fund to cover the shortfalls of with-profits mortgage endowments, came at the company's annual general meeting in Edinburgh last week.

Alastair McClelland, a Standard Life shareholder, used the AGM to demand that the company set aside £100m a year over ten years into the firm's "with-profits fund".

Standard Life chairman Gerry Grimstone argued that the problems with with-profits policies were a legacy of the company's mutual past.

In 2000 Standard Life promised that it would meet any shortfall policyholders faced on their endowment policies. However, when the company got into solvency problems, the promise was changed in 2004 to a guarantee of paying only a proportion of shortfalls.

Monday, May 19, 2008

The 9 Million Shortfall

The 9 Million Shortfall

Over 10 million endowment policies were sold to hapless mortgage applicants in the 1980's and 1990's. The policyholders were assured by the insurance companies that the endowments would pay off the mortgage (why buy it if it wasn't fit for purpose?) and that there may even be a surplus.

Unfortunately those assurances, as we are all well aware, were worthless. have conducted research that shows that a staggering 86% of endowment policy holders (who were questioned) have been warned that their endowment policy will not be enough to pay off the mortgage.

Could the companies that sold and manage these useless products please explain to us exactly what is the purpose of these useless products, if they are not going to pay off the mortgage?

Within those who expect a shortfall, 41% are expecting a deficit of 25% and 23% are expecting ashortfall of a mind numbing 50%.

What exactly have the companies that have been "manging" these policies been doing with their policyholders' monthly contributions?

The figures confirm government findings, which in 2003 estimated that 80% of endowment policies would fail to fulfill their intended purpose.

So, once again, let me give the companies that sold and manage these useless policies the opportunity to answer this question:

Given that these products are incapable of paying off policyholders' mortgages, what exactly are they good for and why did you sell them in the first place?

Tuesday, May 13, 2008

The Traded Endowment Policy Market

The Traded Endowment Policy Market

The Motley Fool gives a straightforward, helpful and easy to understand explanation of the traded endowment policy market.

"A traded endowment policy (TEP) is an endowment that the original policyholder has sold on to an investor. The new investor is then entitled to all future benefits that the policy provides, as they have effectively bought it second-hand. They will also take on responsibility for paying the remaining premiums (if applicable)."

It is worth reading if you are considering selling your policy.

Wednesday, May 07, 2008

Worse Than Worthless

Worse Than Worthless

According to a recent survey by Investment, Life & Pensions Moneyfacts the vast majority of 25 year with-profits endowment policies are now are producing lower returns than they did last year and the year before that.

That's not too good!

Are the people who sold us these useless products, and the people who continue to mismanage them ,receiving lower bonuses as a result of their failure?

I doubt it!

The Motley Fool has some advice about the options available to holders of these useless products.